Houston City Hall pension dispute gears up

Mayor prepares to unveil plan to fix 'problems' that workers say aren't there

By Chris Moran

Updated 1:13 am, Monday, June 18, 2012

Photo: Nick De La Torre

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"I think it is possible to craft a retirement plan for our retirees that is affordable for us, secure for them, but doesn't put me in the dilemma as I was last year ...," Mayor Anise Parker, shown in 2011, says.

"I think it is possible to craft a retirement plan for our retirees that is affordable for us, secure for them, but doesn't put me in the dilemma as I was last year ...," Mayor Anise Parker, shown in 2011,

A day of reckoning has arrived in Houston, the city's financial stewards say, to choose between pensions and pothole repairs.

Days after voters in two California cities curbed public employee retirement benefits and voters in Wisconsin rejected an effort to recall a governor who required state workers to pay more for their pensions, Mayor Annise Parker last week said she plans to unveil a plan late this summer to "address our pension problems."

Asked if her plan could set Houston on a course to become the next Wisconsin, where a yearlong battle has raged over collective bargaining rights and other public employee benefits, Parker said she hoped not.

"I think it is possible to craft a retirement plan for our retirees that is affordable for us, secure for them, but doesn't put me in the dilemma as I was last year of, do I keep active city employees on the job or do I pump money into a pension system over which I have absolutely no control," Parker said.

"We do not have a pension problem," Clark said. The firefighters' pension has banked nearly all of the money it needs to cover current and future retiree benefits, has agreed to relax the city's payment schedule to defer the payment of tens of millions of general fund dollars during tough budget times, and has managed its money so well that investment income covers most of the retiree benefits, Clark said.

"The mayor is pushing reform to be able to spend that money on special pet projects, and because she has a personal grudge against the firefighters for never supporting her," Clark said.

City officials project the annual general fund pension bill to rise by $100 million in the next five years, an increase that roughly equates to what the city spends on parks and libraries each year.

A preview of the undesirable choices such an increase could impose on Houston occurred last year as Parker prepared to lay off 273 jailers until police pension officials agreed to let the city defer millions of dollars of taxpayer contributions to the police retirement fund.

National spotlight

The showdown followed a rebuff of Parker's attempt to change state law, which governs the city's three public employee pension systems. Parker did not get a single lawmaker to carry a bill that would force firefighter pension officials to the bargaining table. Houston's three pension systems spent at least $375,000 on lobbyists last year, according to Texas Ethics Commission records.

Parker's strategy this time is to publicly roll out a plan in writing and launch what she referred to as "a road show" to promote it in advance of the 2013 legislative session.

"I think legislators are more aware of the issue," she said. "The issue of pension reform has risen on the national consciousness much higher than it was two years ago."

The Wisconsin and California votes confirm that, said Josh McGee, a pension expert at the Laura and John Arnold Foundation, a Houston-based philanthropy that supports reforms in criminal justice, education and public accountability.

"I think the unifying theme there is voters are willing to stand up for leaders who tackle the difficult issues," McGee said. "Right now, we face tremendously difficult fiscal issues, and leaders who have been willing to tackle those issues have been rewarded by the voting public."

Steve Kreisberg, a spokesman for the American Federation of State, County and Municipal Employees, countered that each election was an isolated case.

In Wisconsin, pensions were not on the ballot; a governor was. San Diego voters had been exposed to a decade of headlines documenting scandal in the city pension system.

Kreisberg argued that the San Jose mayor distorted pension figures to sell reforms to voters.

Figures disputed

Active and retired Houston public employees have complained that Houston, too, is distorting figures by combining traditional pension benefits and deferred retirement accounts to calculate that firefighters who retired in fiscal year 2011 with at least 25 years' service - and who do not receive Social Security - get a pension that exceeds their salaries by 58 percent.

The benefits are not the problem, Kreisberg said.

"It's really a case where the city leadership have failed the voters and failed the employees by not properly funding the pensions over a period of many years," he said.

Parker, who had substantial labor backing in her 2009 election victory, joins other Democrats who have declared their governments' pension systems unsustainable.

In Chicago, Mayor Rahm Emanuel advocates raising the retirement age and requiring employees to contribute more to their pensions.

Illinois Gov. Pat Quinn also is seeking pension reform in that state's Legislature.

Providence, R.I., Mayor Angel Taveras has struck a tentative agreement with the city's retirees that would suspend cost-of-living increases in their pensions.

The Democrat label may not help Parker in a Republican-dominated Legislature, especially now that she has publicly acknowledged she may consider a run for statewide office.

Test for Parker

A pension fight also will test Parker's political strength after a near-miss in last November's elections in which, despite incumbency and spending well over a million dollars on the campaign, she came within 1 percent of being forced into a runoff against a virtual political unknown who could afford little more in the way of advertising than dragging a banner across the sky over central Houston.

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